michelin fleet solutions case study answers

Michelin Fleet Solutions Case Solution & Answer

Home » Case Study Analysis Solutions » Michelin Fleet Solutions

Michelin Fleet Solutions Case Solution

Introduction.

Michelin is a well-known name for a global leader in Tire Industry. Its core business model includes manufacturing and selling tyres. In the year 2000, Michelin took a wide shift from its product driven strategy to service and solution by initiating MFS (Michelin Fleet Solutions). Under the strategy Michelin would provide comprehensive tyre fleet management solutions specifically to European Transportation Companies. MSF has a potential to differentiate Michelin tyres from its competitors and was expected to provide promised growth in future. But the results revealed soon after 3 years of Michelin’s entrance in the service solution sector was terrible. Despite of substantial investments and presence of a well-known International Strategy Consulting firm, the geographical expansions and the profitability of the company seemed darker. Now the company is at a crucial point to take a decision about its MSF strategy.(Renault, 2006)

Problem Statement

Although, MSF has a potential to differentiate the company from its competitors, but the huge difference between the expectations and actual output of MSF has brought the company at a crucial point to take a decision about MSF.

The objective of the case study is to recommend Michelin an optimum solution for its problems on the basis of deep analysis of company’s internal and external business environment, analysis of the industry trends, the problems with MSF and analysis of customer value and positioning.

Situational Analysis

Currently, Michelin is at a point where it has to take a crucial decision about MSF. It has three possible scenarios from which the company has to choose. First, it would continue the MSF with certain changes in its operations to fix operational problems, second to repackage MSF to reduce the losses caused by MSF and third to abandon MSF and re-shift towards the core manufacturing business. However, there is still unclear picture in front of the management about the potential alternative, which it can choose, due to internal tensions regarding MSF with Jonas Pills emphasizing to continue the program with certain changes with other emphasizing to quit the program and return to the manufacturing and selling business. However, the Jonas has less justifications to prove MFS to be a sustained competitive advantage for the company in future, due to terrible experience of the company in the period from 2000-2003 with MFS.

The other major problem threatening the company is the emergence of Trucks and Bus tires industry. The emergence of the close competitors i.e. Goodyear and Bridges tone towards the service side, in the situation where company faces various problems to make MSF a sustained competitive advantage could also pose a serious threat to Michelin in terms of its declining market share. The problems related to the decision about MSF requires a prompt and effective solutions, as the industry is growing fast and if certain quick measures would not be taken at right time the company would lose its market position in long run. (B, 1991)

Although Michelin has failed to implement its MFS strategy, but the customer value of Michelin which had been the core reason of company’s high market share could not be denied. The company before MFS provided value to customers in terms of longevity of its tires life and still continues the value. However, the potential causes which lead the company to extend its customer value circle was its incapability of justifying its higher price. The company is positioned as a manufacturer and seller of quality tires at a higher price than others. However, some customers position Michelin as a company manufacturing and selling expensive tires. This wrong perception in the minds of customers are due to the fact that Michelin tyres to provide their 100% output needs regular maintenance, which was absent in majority of the customers making it difficult for Michelin to justify its price. Therefore, to increase the customer value for Michelin tires with self-tire management facility, Michelin introduced MSF, under which it decided to provide tire management services for Transportation Companies at a monthly fee based on the kilometers driven per month.

MSF contains number of benefits for the customers including; complete management of their tire assets for 3-5 years, decision to choose to contract only a part of its fleet, peace of mind by outsourcing tire management, better cost control due to less breakdowns, lower fuel charges, operation management and administrative control, availing Michelin innovation and assistance in emergencies. Along with it all the tire related cost would become variable for the customers increasing their cost efficiency.

If we have a deep look on the overall life of a tire sold by Michelin with MSF and the cost per 1000 kilometers, with a comparison of Michelin with Asian Competitors, we would come to know that although Michelin has a high per unit price i.e. 400 as compare to Asian Competitors i.e. 250, but the cost per 1000 kilometers of Michelin tire is low than its competitors i.e. 1.3 as compare to 1.6 for Asian Competitors. (See Exhibit C)

This means that Michelin tires if purchased with MFS provide a high benefit to customers than its competitors.

VRIO Framework

VRIO Framework can be used to analyse that either the MSF could be a sustained competitive advantage for Michelin or not? This could be done by analysis of the level of value, rarity and imitability of MSF and the ability of Michelin to capitalize and benefit from MSF. (see Exhibit A)(Patel, 2016)

Although, MSF has a high value for customers, in terms of reducing their cost per 1000 km as shown in the table in Exhibit and in terms of various benefits stated above. However, the value generated by MSF is difficult to elaborate to the customers, making it fail to become a sustained competitive advantage for Michelin. The company should adopt the strategy of simplifying the contract process with estimated fees and comprehensive standards, as suggested by ISC to make its contracts understandable. Along with it the company should adopt the strategy of training its MSF salespersons, to make them able to elaborate the value of MSF in an efficient way to make MSF a competitive advantage for Michelin.

The rarity for MSF is at top as Michelin is the first tire manufacturing industry introducing tire management solutions. However, the competitors including Goodyear and Bridges tone are trying to emerge in the market. Their entrance in the tire management services can pose a severe threat to the MSF, making it no more 100% rare competitive advantage for Michel in.

Imitability

Imitability for MSF in terms of its application is very low, as it is easy to install a ture management team at the organization. But managing tire management solutions and operations are quite difficult to imitate, as MSF is not only about selling contracts, but it requires efficient management of its operations to become successful. However, the installation plus the management is easy for the big tire companies like Goodyear and Bridges tone, making the imitability of MSF susceptible.

Organization

Making MSF a competitive advantage seems quite difficult when it comes to the core competencies, organizational structure, organizational culture and internal management of Michelin. Michelin has its expertise in manufacturing and selling tires and the company is quite competent in this scenario even with a high price, but MSF is totally related to service side of the tire, in which the company has no experience at all. Along with it the internal tensions among the CEO and the administration about the credibility of MSF and the tensions between the traditional sales persons and the MSF sales persons also make MSF less susceptible to be the sustained competitive advantage of the company.

Porter’s Competitive Strategy

The potential basis for above average profitability in the industry for any company is substantial competitive advantage. There are two types of competitive advantage that can be obtained to gain above average profits. These type are; low cost and differentiation. Michelin’s MSF cab be proved as a sustained competitive advantage for Michelin if it adopt three generic strategies including cost leadership, differentiation and focus, given by Porter. (see Exhibit B)

Cost Leadership

Cost leadership of Michelin in terms of building MSF a competitive advantage is quite inadequate. The company is even unable to estimate the proper costs related to tire management and hence often charge lower contract prices than actual costs, leading the company to suffer heavy losses. It could be seen that MSF business constitutes only 5% of the total business but the cost ratio for MSF with the whole business is about 33%, showing the company’s inefficiency in the cost leadership of MSF. In order to make MSF a sustained competitive advantage of Michelin, it shout perform better in leading MSF costs.(Porter, 1980)

Differentiation

MSF has a great potential to provide differentiation to Michelin tires over its competitors. Currently, MSF has 100% rarity in the market showing its differentiating potential. But the differentiation could be only achieved by making MFS contracts, a high value contracts for its customers. Unfortunately, despite of its rarity and high value, Michelin has failed to differentiate its tires through MFS, because of various internal lacking like tensions within the organization and external factors like incapability of its customers to understand the value provided by MFS.

MSF can be made a sustained competitive advantage for Michelin by segmenting the clients on basis of their needs, which are based upon the commodity they transport. MFS services could be focused only to a particular segment or to a few number of segments. This segmentation would allow the company to provide great attentions to a particular segment rather than targeting the whole customers. It would provide the company an experience with less risks and initial losses…….

This is just a sample partical work. Please place the order on the website to get your own originally done case solution.

Related Case Solutions:

LOOK FOR A FREE CASE STUDY SOLUTION

Product details

Time period

Geographical setting.

Provide details on what you need help with along with a budget and time limit. Questions are posted anonymously and can be made 100% private.

Studypool matches you to the best tutor to help you with your question. Our tutors are highly qualified and vetted.

Your matched tutor provides personalized help according to your question details. Payment is made only after you have completed your 1-on-1 session and are satisfied with your session.

• Homework Q&A
• Become a Tutor

All Subjects

Mathematics

Programming

Health & Medical

Engineering

Computer Science

Foreign Languages

Access over 20 million homework & study documents

Michelin fleet solutions case study.

Sign up to view the full document!

24/7 Homework Help

Stuck on a homework question? Our verified tutors can answer all questions, from basic  math  to advanced rocket science !

Similar Documents

working on a homework question?

Studypool is powered by Microtutoring TM

Copyright © 2024. Studypool Inc.

Studypool is not sponsored or endorsed by any college or university.

Ongoing Conversations

Access over 20 million homework documents through the notebank

Get on-demand Q&A homework help from verified tutors

Read 1000s of rich book guides covering popular titles

Sign up with Google

Sign up with Facebook

Already have an account? Login

Login with Google

Login with Facebook

Don't have an account? Sign Up

• Order Status
• Testimonials
• What Makes Us Different

Michelin Harvard Case Solution & Analysis

Home >> Harvard Case Study Analysis Solutions >> Michelin

Michelin Case Study Solution

1. PROBLEM STATEMENT:

The fundamental problem that Michelin fleet solution faced was the conflict of business strategy which shifted from Product-oriented to service-oriented strategy. The company failed to create a value and Brand image of MFS in customers’ mind.

2. Situational Analysis

The Michelin Fleet solution’s internal and external environmental analysis will be exposed under the 5C model. Through this model, the company and the management can oversee the key strengths and elements that guarantee the sustainability and success of MFS.

      I.            Company

• Michelin has been dealing in the market of tires, offering high quality tires for trucks, and braded cars. It stated as a product-oriented company.
• Michelin has been a leading company offering high quality tires especially in truck category which is the second largest market after self-owned cars. The share in the market grew ever year by 5% on average approximately.
• The company has tremendous success in the tires market followed by Bridgestone. It has created its brand image by continuously offering high premium quality tires that worn out or lasts longer. It has been operating in the market for more than a decade, which has made its root strong in the market with good reputation and strong brand value.
• The company, with passing time, is aiming to shift its business from purely product-oriented company to service oriented company in the same category, by offering maintenance to the tires it produces, however, the sales and revenues are anemic in service section which is making the company’s management concerned about its extension.

  II.            Customers

• The major proportion of the customers that Michelin caters comprises of the truck drivers, and some big companies like Porsche.
• The market share of Michelin tires is increasing rapidly, depicting high popularity ad reliance ofcustomer base.
• The majority of the truck drivers in Europe requires the set of tires that does not require frequent repairs, in which the punctures and heavyweight carrying is an issue.
• The company designs truck tires in a way that it caters the markets of trucks carrying high pressure load, chemical carriers and fast delivery trucks; all these three categories are well-equipped and acquired by Michelin, with its customizes tire offering.
• Over the time, the company has analyzed that the customers are facing problems with tires like frequent punctures that affect the efficiency of the work, however, to counter the issue, MFS has developed a service which offers service to the truck drivers, but the issue that occurred was the lack of communicating the “value” I will bring to the customers.

III.            Competitor

• Michelin is in direct competition with Bridge stone and Goodyear that are giving intense competition to the company in terms of pricing and distribution strategy.
• The market share of Michelin is 19.1% followed by Bridgestone 18% and Goodyear 17.3%.
• Goodyear and Bridgestone early targeted the same segments as Michelin, which are trucks and buses. These both companies are further planning to enter into the service market as Michelin has done.
• Intense competition is present between the three companies with sales margin of 18% each.
• Bridge stone and Goodyear have strong pricing strategy, which matches Michelin and other market players. However, both the companies are lagging behind in terms of tapping new markets, which will at some point, make the product a commodity. Michelin, on the other hand, is working to develop a differentiation strategy by entering into service sector, which gives it a first mover advantage and create distinction in market.

 IV.            Collaborator

• Michelin is planning to make its distributors its service providers.
• To make MFS successful, the company has to build strong relations with its distributors to win the competition, as the major business is dependent on the knowledge and handling of the distribution staff, which creates value and impact to the customer.
• However, the distributors in the current scenario are afraid to adopt the MFS business plan because in their view it will drive away the sales from the stations which is a hugeloss. Keeping that in mind, Michelin offers significant sales and profit to its distributors due to good brand image.

Michelin Harvard Case Solution & Analysis

V.            Climate

• The political situation for the company has been favorable, however, due to economic downturn and inability of Michelin to communicate the value of the MFS, the company faced anemic sales for the three years after the launch.
• The market of tires is a cost sensitive market, where the companies with strong pricing strategy can only survive in the market which is why it is hard to attract customers for MFS and to pay premium for the additional service, which in their vison is just an additional cost.
• The customer base is price sensitive and especially the truck and buses markets are extremely price conscious, which makes it ineffective for the company to launch anything which offers premium quality...................

This is just a sample partial work. Please place the order on the website to get your own originally done case solution.

Related Case Solutions & Analyses:

Hire us for Originally Written Case Solution/ Analysis

Like us and get updates:.

Harvard Case Solutions

Search Case Solutions

• Accounting Case Solutions
• Auditing Case Studies
• Business Case Studies
• Economics Case Solutions
• Finance Case Studies Analysis
• Harvard Case Study Analysis Solutions
• Human Resource Cases
• Ivey Case Solutions
• Management Case Studies
• Marketing HBS Case Solutions
• Operations Management Case Studies
• Supply Chain Management Cases
• Taxation Case Studies

More From Harvard Case Study Analysis Solutions

• Rambus Inc.
• Understanding the Statement of Cash Flows
• Sarah Harris
• Ktm-Venture Capitalist Exit
• Brent Spar Platform Controversy (C)

Contact us:

Check Order Status

How Does it Work?

Why TheCaseSolutions.com?

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions